After the explosive CPI, many senior officials of the Federal Reserve stated: no interest rate cut in the near future is a certainty, the "three top officials" have not turned dovish

After the release of the March CPI and PPI inflation reports in the United States, several senior officials of the Federal Reserve spoke on Thursday, generally believing that based on the latest data, there is no need to adjust monetary policy in the short term. However, it is expected that interest rates will still be lowered later in the year. The "third in command at the Federal Reserve" still believes that U.S. inflation will gradually return to 2%, affirming the progress made in the decline of inflation and stating a non-hawkish stance.

Federal Reserve's Third in Command: No Need to Adjust Monetary Policy in the Short Term

William Williams, the President of the Federal Reserve Bank of New York, who is known as one of the "third in command at the Federal Reserve" with permanent voting rights on the FOMC, stated that there is no need to adjust monetary policy in the short term, and that the monetary policy is in good shape. As the Federal Reserve collects more data, it will be able to assess whether there is confidence that inflation will fall to 2%.

Williams stated that the economic forecasts released at the Federal Reserve's March meeting indicate that if the U.S. economy develops as expected, it would be meaningful to gradually relax monetary policy restrictions starting this year.

Regarding balance sheet reduction, Williams stated that the Federal Reserve plans to slow down the pace of balance sheet reduction, which does not mean that quantitative tightening will stop quickly. This allows Federal Reserve officials to monitor market conditions and smoothly transition to adequate reserve levels. He also added that relevant indicators show that the current reserve levels are still sufficiently safe and high.

Williams acknowledged that it will take quite some time for U.S. inflation to fall back to the Federal Reserve's 2% target. He expects U.S. inflation to continue to gradually return to 2%. He also cited recent inflation data, saying that there may be fluctuations on the path to declining inflation.

Williams believes that the labor market remains strong, with signs of being more "normal," and he expects the unemployment rate to peak at 4% this year and then gradually decline.

Williams pointed out that the relationship between the Federal Reserve's inflation target and employment target has become more balanced, making significant progress in achieving better balance in the U.S. economy and reaching the 2% inflation target. However, the dual mandate has not been fully achieved yet.

Richmond Fed President: Inflation Data Raises Questions

Thomas Barkin, President of the Federal Reserve Bank of Richmond, stated that inflation data raises questions about whether we are seeing a change in the inflation trend. Barkin said he is somewhat reluctant to declare victory for the Federal Reserve against inflation. The timing of Federal Reserve rate cuts will depend on the upcoming data, and it is wise to wait and see if inflation is slowing down.

Barkin pointed out that the Federal Reserve's previous monetary policy tightening actions will further slow down the U.S. economy. The strong performance of the U.S. labor market makes it possible for the U.S. economy to avoid a recession.

Boston Fed President: Rate Cuts This Year May Be Lower Than Expected in the Dot Plot

Eric Rosengren, a 2025 FOMC voter and President of the Federal Reserve Bank of Boston, stated that recent data has made it unnecessary for the Federal Reserve to immediately start cutting rates, dispelling related considerations. However, it is appropriate to start cutting rates later this year, and the number of rate cuts this year may be lower than expected in the Federal Reserve's dot plot or market expectations have decreased.

Rosengren believes that it may take more time than previously thought to gain confidence in the need for rate cuts. The restrictiveness of the Federal Reserve's policy rate may not be as pronounced as anticipated The risk of the Federal Reserve's monetary policy being too tight has eased. In terms of easing monetary policy, a patient and systematic policy-making approach is needed.

Collins pointed out that the first-quarter US CPI data exceeded her original estimates. Consumer/labor demand remains high, which may be the reason for the rebound in US inflation in 2024. In terms of price stability, it is necessary to slow down US economic activity